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    India reports better than expected GDP numbers: What experts make of the latest data

    India reports better than expected GDP numbers: What experts make of the latest data

    India reports better than expected GDP numbers: What experts make of the latest data
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    By Pranati Deva   IST (Published)

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    India's GDP contracted 7.3 percent in FY21 against an expansion of 4 percent in the preceding FY20. The slump was not as bad as the Street had expected thanks to a 1.6 percent rise in the March quarter GDP. Here's what economists say about the latest data and the outlook going ahead:

    India's GDP contracted 7.3 percent in FY21 against an expansion of 4 percent in the preceding FY20. The slump was not as bad as the Street had expected thanks to a 1.6 percent rise in the March quarter GDP. The National Statistical Office (NSO), which released the data, had first projected a GDP contraction of 7.7 percent in 2020-21.
    In the March quarter, the GDP grew by 1.6 percent before the second wave of the COVID-19 pandemic engulfed India forcing restrictions across multiple states impacting economic activity. The fourth-quarter growth was better than the 0.5 percent expansion in the previous October-December quarter of 2020-21.
    Here's what experts have to say about the numbers:
    Deepthi Mathew, Economist at Geojit Financial Services
    GDP registered a growth rate of 1.6 percent in Q4FY21, supported mainly by government expenditure, said Mathew. Government final consumption expenditure (GFCE) registered a growth rate of 28 percent whereas private final consumption expenditure registered a growth rate of 2.6 percent. The impact of the second wave of the pandemic could be seen in the GDP figures for Q1FY22 as most of the states enforced lockdowns and other restrictions from April onwards, added Mathew.
    Madhavi Arora, Lead Economist, Emkay Global Financial Services
    The better-than-expected growth print partly owes it to healthy corporate results in the March quarter of FY21, stated Arora. "We admit the situation is still in flux, and it is too nascent to gauge the true impact of the second wave on macro variables. We believe that the impact is unlikely to be of the same magnitude as last year," Arora said.
    According to her, factors such as better adapted firms and policy response, stable financial conditions and robust global growth spillovers create growth buffers back home. However, she says credible vaccine drive remains the key. "The faster the vaccine traction, the faster would be the delinking between mobility and virus proliferation."
    Nikhil Gupta, Chief Economist at Motilal Oswal Financial Services
    "Within GDP, there was broad-based better than expected growth. Real consumption (led by the government) grew 6.4 percent YoY, and real investments grew 13.8 percent last quarter," said Gupta.
    "Overall, as broadly expected, things are about to worsen in 1QFY22 though YoY data will look very great," he added.
    Rajani Sinha, Chief Economist & National Director - Research, Knight Frank India
    "There has been a healthy rebound in manufacturing and construction sector, though the YOY growth has also been supported by the low base of last year. The sharp discrepancy in the GDP and GVA growth number is mainly due to large one-time subsidy adjustment and is on expected lines," said Sinha.
    According to him, India’s growth trajectory in the next few quarters will be strongly linked to the pace of vaccination and the time taken to control the pandemic. This would have a direct bearing on business and consumer sentiments, which in turn will influence the consumption and investment scenario, he added.
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